ADB to help import power from Bhutan

The Asian Development Bank (ADB) would help Bangladesh import power from hydro-power-rich Bhutan, with the setting up of a regional power transmission line for cross-border electricity trading, an energy expert at the Bank’s headquarters said.

“If both Bangladesh and India are linked through the Indian power market, power trading opportunities can be explored in the South Asia region,” Len V. George, Energy Specialist, South Asia Department of the ADB, told the FE.

Following the Bangladesh-India cross-border power

transmission grid operation, the ADB expert was interviewed by the FE as the agency had helped in installing the 400-kilovolt (kv) transmission line to import electricity by Bangladesh from India.

The ADB has financed the cross-border transmission line aimed at expanding a regional power transmission grid in the near future under the South Asian Sustainable Economic Cooperation (SASEC) programme.

Dhaka has already signed a 1000-megawatt power import deal with New Delhi, as Bangladesh has a huge electricity shortage, which has been affecting its economic growth over the years.

Initially India is supplying 175 megawatt (mw) of power, that has begun early this month. Gradually, the neighbouring country will supply 500mw of electricity by the year-end and another 500mw from the next calendar year.

When asked on ADB’s possible help in Bangladesh-Bhutan power trade, Len V. George said: “Setting up of the regional grid connecting Nepal, India, Bangladesh, Bhutan, Sri Lanka, Pakistan and Myanmar over the medium term allows greater investment and more optimal utilisation of regional energy resources, e.g. hydropower resources in the region.”

The ADB energy expert said variations in weekly or seasonal demands between the countries of the region encourage power trading and more optimal use of resources.

“ADB supports regional cooperation and integration. It is working with the South Asian Association for Regional Cooperation on a South Asia electrical grid allowing regional transfer of power and optimal usage of regional energy resources,” Ms George said.

Bhutan and Nepal have huge hydropower potential as the countries have a prospect of 23,000mw and 42,000mw of electricity generation from water resources respectively.

Bangladesh government has already sought corridor from India to install a cross-border transmission line to import power from Bhutan and Nepal. But New Delhi is yet to allow Dhaka to construct the transmission grid.

About the viability of power import from India, Ms George said the cost of HFO (oil) or diesel power projects coming up in Bangladesh is several times higher.

“This is replaced with cheaper power. Setting up of a regional grid benefits India, Bangladesh and other countries in the region allowing optimal investments and power flows. India will recover its costs from tariff on sale of power,” she said.

On the price of Indian power, the ADB energy expert said the first power purchase agreement (PPA) is a government-to-government negotiated contract, while the second one will be commercially priced.

“The present weighted average cost of electricity generation in Bangladesh is low due to dependence on domestically produced gas for the power sector — with significant subsidies compared to the rest of the South Asian region. This, among other reasons, is causing gas shortages resulting in capacity addition using HFO and diesel at several times this price — since the cost of not having electricity for the economy is even higher,” she added.

About the criticism of Indian power import by some Bangladeshi experts, she said: “India has some short-term surpluses and will add in the region of 90,000mw-100,000mw over a five-year period. Bangladesh also has its own plans to add significant power generation capacity to its existing base in the medium term. The setting up of the regional grid connecting Nepal, India, Bangladesh, Bhutan, Sri Lanka, Pakistan and Myanmar over the medium term allows greater investment and more optimal utilisation of regional energy resources, e.g. in hydropower resources in the region. Variations in weekly or seasonal demands between the countries of the region encourage power trading and more optimal usage of resources.”

Ms George noted ADB’s support to construction of the 400kv India-Bangladesh grid line will be the first initiative under the SASEC programme. “Additional links are planned in the future,” the expert added.